Melrose says GKN's powder metallurgy operation would be divested in the "medium term" as part of an effort to "focus on GKN's main businesses" in the aerospace and automotive segments.

The powder metallurgy division includes additive manufacturing activities for GKN Aerospace, Melrose notes. Non-core activities in the aerospace and automotive divisions would be sold too, it adds.

Melrose chief executive Simon Peckham argues that GKN's business is "capable of significant value enhancement". He states that Melrose's plan is "in stark contrast to a break-up of the business by a GKN management, which has consistently underperformed, or a hasty possible sale of parts or all of the business".

On 12 January, GKN disclosed its rejection of Melrose's takeover bid, describing it as "entirely opportunistic". The terms of the bid "fundamentally undervalue the company and its prospects", said GKN.

It had warned in November 2017 that it faced a working-capital write-off up to £130 million ($180 million) as a result of "external claims" regarding its US aerospace operations in Alabama.

As part of a two-year programme to "significantly" raise profitability, GKN intends to separate its aerospace and automotive divisions. The split will provide "strategic optionality" for shareholders as it would create "separate companies with distinct investment profiles and capital allocation policies", GKN asserts.

Citing nondisclosure regulations during a quiet period, GKN declined to provide further detail on the proposed separation. The company says it is making preparations to fend off Melrose's interest, and will reveal details within weeks.

Melrose has to indicate by 9 February whether it wants to make a firm offer for GKN.